Norway Suffers Setback In Quest For Arctic Oil Discoveries

One of the most active companies on the Norwegian Continental Shelf, Lundin Petroleum, said on Monday that it had revised downwards its resource estimate for a recent discovery in the Barents Sea, and that it no longer considers that a stand-alone development would be commercial.

Although Lundin Petroleum reported overall increased reserves and contingent resources as of December 31, 2019, its estimate for the Alta discovery in the Arctic waters of the Barents Sea “has been adjusted downwards,” based on the high specification 3D seismic survey and extensive data and analysis from the well drilled for the extended well test conducted in 2018.  

Initially, Lundin had expected that the combined gross resource range for the Alta discovery and nearby Gohta discovery was at between 115 and 390 million barrels of oil equivalent (MMboe). As of September 2018, the development concept for Alta was a subsea field development connected to a standalone floating production and storage vessel.

But now, Lundin is revising down its resource estimate, although it did not say by how much, and notes that “a standalone development of the Alta and nearby Gohta discoveries is no longer considered to be commercial.”

The options for development now include a subsea tie-back development to either the Johan Castberg oilfield or another future host development in the area, Lundin said on Monday.

Related: Canada Faces A New Oil Price ‘’Blowout’’

The decreased resource estimate is another blow to the hopes of the Norwegian Petroleum Directorate (NPD) that major discoveries in the Barents Sea could sustain Norway’s oil and gas production into the next decades.

The operators offshore Norway are exploring for oil and gas in both mature areas and in frontier regions in the Barents Sea in the hopes of finding the next giant Johan Sverdrup, which started pumping oil in early October 2019.

Johan Sverdrup will boost Norwegian oil production through the mid-2020s, but the country will need more and larger oil discoveries soon in order to stave off another drop after the mid-2020s.

According to NPD, 48 percent of resources in the North Sea, the Norwegian Sea, and the Barents Sea have been produced. In its annual report for 2019 last week, NPD lowered expectations for the Barents Sea Southeast due to dry wells, but lifted expectations for undiscovered resources in the central parts of the Barents Sea, due to the mapping of several prospects and good work in production licenses.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Are Oil Prices Still Too High?
  
• China’s Oil Demand Growth Could Halve This Year
  
• Why Gas Prices Aren’t Soaring On Iranian Conflict